Utility Banking offers traditional basic banking services, accepting deposits, making payments directly, by standing order, cheque or debit card facility. The Bank offers loans on conservatively secured medium-value asset purchases, though its Loan Portfolio should not be overweight in any one asset class (eg property).
The Bank may provide Property Mortgages, but its Mortgage Portfolio should be administratively and financially separate from other banking services. All mortgages should meet current regulatory criteria regarding applicant affordability, and carry an insurance premium based on a government-set Property Inflation Index to protect the Bank against default. Alternatively, Mortgages may be provided through dedicated Property Investment Funds similar to Building Societies. The collapse of mortgage lender Northern Rock. The Bank may also offer Credit Card facility. All Credit Cards subject to a Global Credit Card Limit, one aggregate limit on all credit cards held by each holder. During periods of economic expansion, consumer credit rises as card holders commit future income for current purchases; as downturn threatens jobs, consumers tend to run down their credit card debt. Consumer Credit can thus create its own economic cycle of expansion/contraction. The Bank may not take out loans or undertake speculative investments on its own account. All services subject to strict regulation to ensure compliance. Utility Banking is boringly safe and secure. Yet much like electricity, water, and clean streets, basic Utility Banking is an essential - indeed the most essential element of our infrastructure. Utility Banking is boringly safe and secure. Let's keep it that way. |
Regional Development Banks provide loans for new industries large and small, industrial development and expansion, productivity improvements, and for regional infrastructural improvements.
Loans are based on Project Securitization, that is, on the security of the Project itself, subject to in-depth initial scrutiny and followed-up with a continuing flow of data, comparing projections with actuality. Development Loans may also be used to finance local infrastructure investment.
Project Securitization creates employment. |
Bank failures, slumps and crashes, as well as other forms of financial and banking disorders, have almost universally been caused either by property collapse or, more frequently, by banks undertaking on their own account clandestine high-risk, highly-geared investments frequently financed by short-term borrowing.
If a "bet" pays off, the rewards can be staggering, both for the bank, and for individual traders. If a trade makes a manageable loss the bank quietly conceals it and moves on. Major, bank-breaking losses fortunately happen rarely, and when they do, it's the tax-payer who foots the bill. A win-win situation for the banks. Shell-shocked depositors and taxpayers will have their own views. The Wonderful World of "Structured Investment Vehicles". Let the high-flying traders gamble using obscure high-stakes high-risk devices - but as shareholder-financed, clearly described and totally segregated Investment Funds, not with ordinary people's hard-earned cash and savings... and certainly not with taxpayers' money. No off-balancce sheet assets. No speculative investments may be undertaken by any bank on its own account. All such ventures MUST be individually accountable, marketed to investors as Investment Funds, then financed by the Funds' shareholders. |
